6 reasons why it’s important for marketing to understand finance
While we are not saying that you should rush to give a virtual hug to your nearest finance person, it is important to understand finance. That means both understanding what drives financial performance as well as dealing with the finance bods. Now, it should be pretty clear that most marketers and finance people are opposite ends of the spectrum when it comes to personality. But, that just means that there is a lot to learn from each other so read on discover 6 reasons why it’s important for marketing to understand finance.
The bean counters are coming
In truth, they probably already arrived. A pandemic is a pretty good reason for the numbers to come under greater scrutiny. After all, the very survival of some companies and countless jobs depends on it. So, it makes sense that we all play along and try to get along.
Finance people are custodians of the financial results and the purse strings. In some businesses, that could be seen as ‘keeping score’ and control over cash flow. However, never are accountants more involved than during a downturn and that means marketing gets paid a visit. It isn’t quite a case of ‘sending the boys ‘round’ but it may have felt uncomfortable.
Here’s a big tip. One thing that really helps any conversation with finance is knowing your numbers.
6 reasons why it’s important
Here are 6 reasons why it’s important for marketing to understand finance:
- Finance approves the marketing budget – yes, you may not like it but finance is heavily involved in signing off budgets in most companies.
- Finance approves capital expenditure – if you are looking at a systems transformation or similar big investment, finance will have a governance process to review and approve.
- Marketing needs to be able to talk to finance – it sounds obvious but the first two reasons really depend on communication, particularly in terms of detail.
- Marketing needs an ally in the boardroom – it may be a surprise that marketing can be a lonely voice in some boardrooms so why not have another ally?
- Finance wants to be informed of spend and performance – as custodians of the corporate credit card, finance sometimes have to explain how it is being used.
- Finance may intervene if funds are not invested wisely – if money is spent with little return, questions are inevitably asked so finance quickly need answers.
Getting to know the numbers
A major element of a successful understanding of finance is to know your numbers. Yes, being able to openly and honestly discuss the numbers in detail and with confidence will go a long way. Many accountants will get comfortable pretty quicky once you start to speak their language. While it isn’t all ones and zeroes, numbers and detail are very familiar to finance teams.
If at this point you want to run for the hills, bear with us. One thing that really might surprise you is that finance people are often really interested in business and marketing issues. As finance roles in larger companies move further away from general bookkeeping towards ‘value add’ work, they wish to enhance their commercial skills. This gives marketers a great opportunity to engage the professional curiosity of their finance counterparts.
Managing the CFO
While ‘managing’ may be a strong word, you can be on the front foot with the CFO. A solid grounding in marketing KPIs and results in the context of the overall reported business results shows the CFO that you have the same goals. Being prepared to go into detail will also help.
The good news is that many finance departments generally have little analytics and data of their own outside of the accounting system. With most marketers being fortunate enough to have more data, analytics and reporting than they know what to do with, this is a real strength. As a result, the finance team are relying on you to explain your performance so there are no surprises – it is your data and your numbers. As long as you understand what you are presenting and have detail to backup what you are saying, it should be relatively simple.
In the end, you may wonder what all the fuss is about. However, with this openness comes accountability so the targets and results you agree and report need to be achieved.
Making the case for investment
The best thing about understanding finance is that it gives you a helping hand when it comes to budget time and with investment cases. As well as recognising the personality differences between the two disciplines, finance can develop your ‘hard skills’ in making an investment case. A successful relationship bodes well for understanding what finance needs to obtain your funding.
In conclusion, while marketing may be initially apprehensive about close proximity to finance, there are advantages. Communicating your value add, contributing to business results and obtaining investment approval will all become easier over time. Just don’t put your head in the sand and you will find that finance may get behind you once they understand.
Interested to delve a little deeper into why it’s important for marketing and finance to get along? Check out this related article.
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